Asset manager calls on Steinhoff board to resign

Benguela Global Fund Managers says corporate governance is not negotiable.
Benguela Global Fund Managers has written to Steinhoff chairman, Christo Wiese, asking the entire board to resign. Picture: Bloomberg

A local asset manager has taken a vocal stance on the allegations of financial irregularities at Steinhoff. Benguela Global Fund Managers has written to chairman Christo Wiese, requesting that he and the entire supervisory board step down.

In the letter to Wiese Benguela’s chief investment officer, Zwelakhe Mnguni, says that the issues Steinhoff is facing should have been detected sooner and potentially even avoided if there had been effective oversight. 

“At the core of this massive value destruction lies a broken corporate governance structure that has failed to hold the executive accountable and to protect shareholders,” Mnguni wrote. “Dr Wiese, we don’t think that with the information available in the public domain anyone could suggest that you were aware of everything that went on or that you were complicit in what appears to be criminal acts that Markus Jooste himself has described as ‘big mistakes’…. However, we hereby make the case that the board, as the custodians of the company’s assets, should have taken steps to thoroughly investigate the allegations of accounting and tax impropriety as soon as they came to light.”

Mnguni pointed out that only in August Wiese had argued in a radio interview that the allegations of accounting and tax issues published by Manager Magazin were “drivel” and “devoid of any truth”. Yet just a few weeks later the board acknowledged that there were indeed potential financial irregularities.

He also asked Wiese to clarify how the board could have decided that it would be appropriate for Steinhoff to release unaudited financial results. The intention to do this was communicated through Sens on December 4, but it was later decided to delay their release until further investigations had been completed.

“How did the board arrive at the conclusion that it is okay to release the financial statements for the full year without the auditor’s opinion and not foresee that this would spook shareholders already alarmed by allegations of accounting fraud and tax investigations?” Mnguni asked. “Did the board intentionally withhold market-sensitive information about disagreements with the auditors until the last minute – why not announce the delays in October or November 2017?”

Mnguni also raised the fact that on December 6 the board advised shareholders that new information had come to light relating to accounting irregularities that require further investigation. This was the same announcement in which the market was told that Jooste had resigned.

“Is it possible that some of these irregularities were those whose existence was denied in the September 18 Sens announcement?” Mnguni said. “Shouldn’t the allegations of irregularities have led the board to promptly appoint an independent third party to investigate immediately on September 18 as opposed to an exceptionally late reaction after the fact? Does this on its own not indicate the lack of independence, to question and hold the executive to account, in the board?”

He points out that it appears that while the board was aware of investigations by German authorities into Steinhoff since 2015, it had until now elected to dismiss claims of accounting irregularities out of hand.

“Given such enormous value destruction as a direct result of the board’s dereliction of its oversight duty and responsibility, I hereby call upon you and the entire board of directors of Steinhoff International to step down immediately,” wrote Mnguni.

He added that Benguela had written to Wiese on a number of occasions before asking him to address governance issues on both the Steinhoff and Shoprite boards, but his responses were “underwhelming and in fact contemptuous”.

“Now that the self-same governance issues that we previously raised directly with you, Dr Wiese, have caused minorities so much hardship, it would certainly be appropriate for you to resign as chairman and a director of the board,” Mnguni argued. “This is the biggest public scandal in the history of South Africa. Please preserve your legacy as an astute businessman, do the honourable thing and step down.”

In a separate press release, Mnguni also contended that investment managers and regulators should work together to seek “justice for clients” who had been affected by the enormous loss of value in Steinhoff securities.

“Corporate governance is not negotiable irrespective of whether it’s in the public or private sector,” said Mnguni. “We’ve had too many corporate financial scandals since 1994 without any legal consequences to the perpetrators of these financial crimes. Most recently we noted that there have been no criminal prosecutions in respect of the collapse of African Bank which also cost investors substantial financial losses. If the investment management industry and regulators don’t step up the pressure in the Steinhoff case, the precedent set by the African Bank could become entrenched and thus do irreparable damage to South Africa’s ability to attract the desperately needed investment capital in future.”

He argued that this should not be allowed to happen.

“As Benguela we feel that the time has come for the investment management industry to abandon a diplomatic approach to corporate scandals but stand together to safeguard the hard-earned assets of our clients.”

Please consider contributing as little as R20 in appreciation of our quality independent financial journalism.

AUTHOR PROFILE

COMMENTS   18

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Brilliantly said. Well done!!!!

At least one decent asset manager says what the serpents at Coronation, Foord etc had to say a week ago. Well done!

Lategan, Konar, Van zyl and Booysen….GET OUT!!!!

Yes, brilliantly said, but KAP and PSG board should also resign because they and Steinhof are one and the same and part of the same racketeering.

Very rich Benguela – where are all your public proxy votes, voting guidelines etc as required to be placed on your website for the public to see as required by UNPRI & CRISA

robot, are these “requirements” in anyway related to the Steinhoff issue (or letter to the board)? If so, how?

Finally someone within the asset managers fraternity has spoken. Oh by the way I am still waiting to hear from both my Broker and Financial Advisor. Maybe they will come-around

Not even a public fund fact sheet of your equity returns and holdings

So true – you got german authorities investigating accounting fraud since 2015 – and the board does nothing – dah – and so too – must the same asset managers resign as well, from the likes of coronation, allan grey, etc etc, because they also did not ask the right questions and perform due diligence considering they are responsible for the investment of billions of rands in Steinhoff.

A new board must be appointed and Markus Jooste and Chriso Wiese must be arrested and charged with fraud by the Office of serious and economic crimes – why the double standard for white people. Zuma and the guptas are crucified daily by public opinion albeit (rightly so coz they thieves) – Were is the DA, Afri forum Business leadership sa on this issue. Chriso Wiese could be the Bernie Madoff of SA.

Dr Wiese? Where did the PhD come from? Bellamant University?

Well, his qualification is listed as DCom (hc); hc = horizontal comparison.
So it appears he did not actually study and qualify to earn a DCom. However, some “comparison” by whoever was done to conclude that he should be given the DCom on the basis of some unknown to the public.
The university is not listed either; assuming it would have been a university that gave him the DCom.

Horizontal comparison?? Is that a joke?
Honoris causa (hc) means it is an honorary degree which has been awarded. It is customary not to use the prefix Dr before a person’s name in the case of an honorary doctorate, but some people like to do so.

It is unlikely that outside investors will ever know the truth while insiders like Wiese and van Zyl remain on the Board. Other SA Board members are lightweight and in all probability had no clue what was happening under their noses. Wiese and van Zyl should step down to give investigators room to investigate. The rest should resign because they should never have been there in the first instance.

Explore the Wiese/van Zyl/Sanlam connection to understand why van Zyl was never independent.

The Steinhoff implosion wiped halve of Christo Wiese’s net worth. The legal claims for compensation will wipe the other half. The board-members will be held accountable in their personal capacity. The headache for board-members has only started. The share price has found support, but the destruction of board-member’s personal net value is still in free-fall.

The “gin and tonic” directors. Dining out and impressing everyone they are directors on the board of this and that. They do nothing, probably don’t even read the minutes, collect a few R100k a year and get pissed at lunchtime on shareholders funds. Lets hope they get chased personally as they should be held personally responsible for this mess.

As for Jooste, well he is not the only arrogant CEO out there, lots of them thinking they can just bulldoze any deal through. Their time will come.

The entire board should resign. They either knew what was going on or are so incompetent that they were not aware. They are disqualified on either count. A totally independent board should be appointed to clean up the mess.

There are absurdities all over:

1. The CFO has not been suspended, never mind resigned.

2. Wiese is named as owning 60% of one of the laundry counterparties, yet is in place and as CEO.

The lenders will likely step in as a group soon. They cannot let the same people that cooked the books arrange the independent investigation. Shredders anybody?

Wiese is going nowhere. He is part of the “Brotherhood”.

And the media will not dare mention his name.

Wiese is going nowhere. He is part of the “Brotherhood”.
And the media will not dare mention his name.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Podcasts

INSIDER SUBSCRIPTIONS APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING PORTFOLIO TOOL CPD HUB

Follow us:

Search Articles:
Click a Company: